Their is no consideration given to the shed (which is not a permanent foundation). Flood determination company will not update status to not in flood zone.... Do we really have to get flood insurance on the shed, which is like a $1200 shed from Lowes?? Never had this happen before in all these years... any suggestions?

The determination company doesn't care about whether or not you gave consideration to the shed. The see a structure on the aerial map and report the zone it is in. They don't know if it's on a perm foundation or not. They only see the roof.

Unless you can demonstrate that this shed has no value (or value low enough that you can't get insurance (ie value equal to or less than the minimum deductible), it is uninsurable, or that the shed can be moved immediately in the event of a flood (picked up and driven off quickly), you will need to get flood insurance.

What's it doing, sitting on the ground with no stakes at all? Sounds like you might can exempt it from coverage, depending on what the minimum deductible is and what the actual value is:

Deductible
The standard deductible is $500 for new
construction, for all buildings constructed
after the community adopted its initial Flood
Insurance Rate Map (Post-FIRM), and for
buildings rated in Zones A99, B, C, D, or X.
The standard deductible for older buildings
(Pre-FIRM) is $1,000. Deductibles are
applied separately to buildings and again to
contents.

ETA: Your other option would be to remove it specifically from the deed (which is what I would likely do if it otherwise is eligible for insurance)

If this shed is not tied down to resist lateral movement, it is not insurable.